The government has announced, effective February 19, 2014, under the Property Transfer Tax (PTT) First-Time Home Buyers’ Exemption program, qualifying first-time buyers can buy a home worth up to $475,000 and be exempt from paying the tax. The previous threshold was $425,000.

The purchase must be a principal residence and a first time purchase

The value must be $475,000 or less and registered on or after February 19, 2014

The partial exemption continues and will apply to homes valued between $475,000 and $500,000

This cost can not be incorporated into a mortgage, so it must come out of cash funds the buyers had to save along with their down payment.

PTT is calculated as 1% on the 1st $200,000 of the home value & 2% on the balance and is charged on all residential purchases. With this change, the government estimates 1,700 additional first-time buyers will annually be eligible to save up to $7,500 in PTT when they buy their first home. Every bit helps especially with the outrageous cost of living in the lower mainland and the ridiculous amount of tax we pay here!

Apparently government estimates this measure will cost $8 million in lost tax revenue each year. And we are supposed to feel sorry for the government for lost revenue? Despite the fact that B.C. has the highest home prices in Canada, the province perversely imposes one of the most onerous such taxes in Canada. The Real Estate Board of Greater Vancouver points out that B.C.’s tax, introduced in 1987, “is structured to reflect home prices in the 1980s, not the prices home buyers pay today.”

We would all like to see more changes to the Property Transfer Tax, but this is definitely a step in the right direction.

The banking regulator of Canada is mulling another tightening of the mortgage rules. An eminent spokesman of the Office of the Superintendent of Financial Institutions has reportedly said that they’re considering some tough rules that would restrain the banks from issuing any mortgages that carry amortization period of more than 25 years. Presently, the lenders in Canada offer mortgages for as long as 35 years when the borrower boasts of a stellar credit rating and a substantial down payment. OSFI told Canadian Mortgage Trends that they’re doing some initial consultation with the financial institutions and some other mortgage lenders on this issue. Given the current condition of the Canadian housing market, there is a need of some changes so as to reduce the total amount of household indebtedness and the number of foreclosures.

2012 was a year in review – Some noteworthy changes to the mortgage financing rules

In the month of June, the Finance Minister of Canada happened to announce the 4th cycle of alteration to the mortgage financing rules and they’re continuing to squeeze the investors, the borrowers, the lenders and the entire industry alike. As per the CAAMP or the Canadian Association of Accredited Mortgage Professionals, such changes are probably going to affect the entire economy. The key change, as mentioned above is related to the cap of the amortization period at 25 years. For all those real estate investors who are looking forward to invest their dollars will also be subject to certain changes in 2013. The lenders will demand the self-employed borrowers to pay down an amount of 35% of the total loan balance and this trend will continue throughout 2013.

Mortgage market trends to chase in 2013 – A guide for the investors

Market correction in the Canadian market: There’s a word about a possible bust in the real estate market and the news headlines point at the sudden rise in the level of household debt in Canada, that are adding to the level of concerns. According to reports, the Canadian real estate market isn’t going to have a severe crash as the quality of debt carried by people is much different here. The Canadian Association of Mortgage Professionals report that about 70-80% of the Americans invested in variable rate mortgages and this will rather indicate a stable housing market.

Strategic mortgage changes: The investors will experience greater challenges while qualifying for a mortgage loan in 2013 as there will be a noticeable change in the down payment required to snag a mortgage deal and the qualifying terms will also become more stringent. The equity programs will require 35% of the loan amount as the down payment. Securing a mortgage deal will therefore become difficult with the new mortgage trends.

Lease agreement for investment properties: In 2013, lease agreements will be required while financing the investment properties as more an more lenders are demanding lease agreements before the completion of financing. For investors, you can ask your realtor to obtain copies of the present tenancy agreements as this will reduce the complications throughout the track.

Securing financing for your homes in Canada will continue to be more stringent and tough after the new financing rules coming into effect. Get in touch with a myself to take the best decisions in the market.

BC Multiple Listing Service® (MLS®) residential sales are forecast to edge up 1.9 per cent to 68,900 units this year, before increasing a further 6.5 per cent to 73,400 units in 2014. The five-year average is 74,600 unit sales, while the ten-year average is 86,800 unit sales. A record 106,300 MLS® residential sales were recorded in 2005.

“Stricter mortgage credit regulation combined with slower economic growth has kept BC home sales at a cyclical low over the past three quarters,” said Cameron Muir, BCREA Chief Economist. “However, a faster growing economy is expected during the second half of the year and through 2014 which will support a growth trend in provincial housing demand.”

“The BC average home price forecast is revised upward for 2013, from a decline of 1 per cent to remaining unchanged, as a result of stronger than expected market conditions in Vancouver,” added Muir. The average MLS® residential price in BC is forecast at $515,800 this year, before rising 1.7 per cent to $524,500 in 2014.